FSOC removes Prudential’s systemically risk label

By Verdict Staff October 19, 2018

Prudential Financial, which was termed as “too big to fail” aftermath of the financial crisis by the regulators, has been declared no longer systemically important financial institution by the Financial Stability Oversight Council (FSOC).

Under Dodd-Frank rule, Prudential as well as MetLife and American International Group (AIG) were categorised as a systemically important financial institution (SIFI) in 2013.

These SIFI were deemed as threats to US financial stability and the US regulators feared that their failure might trigger a financial crisis.

Now, Prudential will not be subjected to strict capital requirements and disclosures as well as stricter oversight by the Federal Reserve.

Treasury Secretary Steven Mnuchin said: “The Council’s decision today follows extensive engagement with the company and a detailed analysis showing that there is not a significant risk that the company could pose a threat to financial stability.The Council has continued to act decisively to remove any designation that is not warranted.”

Commenting on the FSOC decision, Prudential said: “We are pleased with this decision, which affirms our longstanding belief that Prudential never met the standard for designation.